BOT relaxes forex rules to ease pressure on baht
The Bank of Thailand (BOT) has relaxed foreign exchange regulations in a bid to ease capital flows and curb baht volatility amid its slide against the dollar.
The move is designed to make investment and transactions in foreign currencies more convenient. It should also help the Thai private sector manage risks and reduce transaction costs.
The BOT announced three measures to further ease forex rules on Monday.
First, the yearly US$50-million cap on lending to unaffiliated companies and for purchase of property abroad will be removed.
Thai companies will also be able to purchase foreign currencies for transfer domestically as necessary, aiding payment for goods whose price is linked to the global market. Previously, transfers were allowed only through foreign currency deposit accounts.
Second, resident companies will be able to manage their foreign exchange risk in a broader scope, such as by hedging foreign exchange exposures arising from domestic payment for goods whose price is linked to the global market, hedging on behalf of other resident affiliated companies, hedging of anticipated foreign exchange revenues or expenses with a tenor longer than one year, and hedging balance sheet exposures.
Third, the burden of providing documents for foreign exchange transactions will be eased for Thai residents. Bank customers will no longer be required to submit underlying documents when undertaking regular foreign exchange transactions.
The changes will go into effect the day after being published in the Royal Gazette.
